Nikhil Adhesives Downgraded to 'Sell' by MarketsMOJO, Underperforms in Market.

Nikhil Adhesives, a microcap company in the chemicals industry, has recently been downgraded to a 'Sell' by MarketsMOJO on July 15, 2024. This decision was based on the company's flat results in March 2024, with the lowest operating profit to interest ratio of 4.25 times and the highest interest of Rs 2.09 crore. Additionally, the company's ROCE of 15.8 indicates an expensive valuation with a 4.3 enterprise value to capital employed.
Despite the stock trading at a discount compared to its historical valuations, it has underperformed the market in the last year with a return of only 9.87%, while its profits have fallen by -22.3%. This is a cause for concern for investors, especially since domestic mutual funds hold only 0% of the company. This could indicate that they are not comfortable with the price or the business, as they have the capability to conduct in-depth research.

On a positive note, Nikhil Adhesives has a strong ability to service debt with a low debt to EBITDA ratio of 0.88 times. However, the technical trend for the stock is currently sideways, indicating no clear price momentum. This trend has deteriorated since July 15, 2024, when it was mildly bullish, and has only generated a return of 2.53% since then.

In conclusion, while Nikhil Adhesives may seem like an attractive investment due to its microcap size, the recent downgrade to 'Sell' and underperformance in the market should be taken into consideration before making any investment decisions. It is important to conduct thorough research and analysis before investing in any company, especially in the volatile chemicals industry.